BP (formerly The British Petroleum Company p.l.c. and BP Amoco p.l.c.; stylised in all lowercase) is set to abandon its previous pledge to cut oil and gas output as CEO Murray Auchincloss faces mounting pressure to turn around the struggling energy giant and fend off activist investor Elliott Management, which has acquired nearly a 5% stake in the company. The move will be announced during BP’s investor day, along with at least one major divestment, as Auchincloss seeks to reassure shareholders and boost performance.
Auchincloss, who took over as permanent CEO 13 months ago after Bernard Looney was dismissed over undisclosed relationships with colleagues, is under scrutiny from both shareholders and BP’s board. Some board members believe Auchincloss has been too slow to enact the strategic changes needed to restore investor confidence. With Elliott Management now in the picture, pressure has intensified for decisive action.
The upcoming investor day is seen as a pivotal moment for Auchincloss, who has hinted at plans to boost oil and gas production while cutting spending in other areas. However, this event is expected to bring concrete announcements, including the complete abandonment of BP’s previous commitment to reduce oil and gas output by 25% by 2030—a target already scaled back from the original 40% cut announced in 2020.
Elliott Management has yet to publicly outline its demands but has reportedly criticized BP’s volume-based green energy targets for limiting the company’s flexibility. BP’s earlier strategy, aimed at transitioning to renewable energy, tied the company to static goals that Elliott argues have hurt shareholder value.
In response, BP is preparing to announce significant asset sales. Options under consideration include divesting parts of its marketing and retail operations, selling its Castrol lubricants business, or listing its US shale operations. There is also speculation that BP could spin off segments of its low-carbon ventures, such as solar energy company Lightsource BP or its stake in Brazilian biofuels producer Bunge Bioenergia.
The company’s shift toward prioritizing traditional oil and gas production follows a broader industry trend, as rivals like ExxonMobil, Chevron, and Shell continue to ramp up output. BP’s production has already declined from around 2.6 million barrels of oil equivalent per day in 2019 to 2.3 million today, but analysts expect Auchincloss to signal a reversal of this decline.
Elliott has engaged with Auchincloss and BP’s chair, Helge Lund, but has not yet called for leadership changes. However, if Wednesday’s investor day fails to meet expectations, some board members anticipate that Elliott could push for boardroom changes, including potentially replacing the chair or CEO.
Historically, BP has avoided announcing divestments ahead of time, but given the pressure from Elliott and other shareholders, this strategy is likely to change. The company’s share price has previously surged when it eased restrictions on oil and gas output, suggesting that abandoning its climate-related production cuts could appeal to certain investors.
However, this shift could alienate environmentally focused shareholders. A group of investors has already written to BP’s board, demanding a vote on any changes that weaken the company’s climate commitments. Scaling back green energy ambitions could slow BP’s emissions reduction goals, potentially clashing with its previous pledges to cut carbon output significantly by 2050.
